Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Rba Rate Decision

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The Reserve Bank of Australia (RBA) has kept the interest rate on hold today at 2.5%. Interest rates have remained at a record low since August 2013.
ME Bank general manager markets, John Caelli, said that the focus from the RBA remains on providing conditions to support business investment and unemployment, with other options for dealing with house price increases.
"The RBA has flagged that measures other than interest rates may be more appropriate to address the issue of house prices," said Caelli.
RP Data head of research Tim Lawless noted that softer readings for housing market conditions over September may have eased some of the concerns that the RBA held about the property market, however the trend does remain strong.
While a 0.1% growth figure was recorded across the capitals for the month of September, the quarter still recorded a 2.9% increase.
He said it will still be important to monitor the trend rate of growth across Sydney and Melbourne.
"Investor interest in these markets has been significant compared with other capital cities and compared with historical ratios of owner occupier loans to investor loans," said Lawless.
"If investor interest in these markets doesn't moderate we can expect the RBA, in conjunction with APRA, to intervene via prudential regulation of the banking sector to attempt to slow down the level of investment lending activity in the market," he said.
This intervention, he suggests, may be higher risk ratings or capital for investment loans.
"In any event, the goal would be to slow the level of speculative investment across the housing market, particularly in Sydney and Melbourne, alleviating the pressure on the RBA to raise interest rates in order to dampen housing market conditions," he said.
Michelle Hutchison, money expert for Finder, noted that all the experts recently asked in their Reserve Bank Survey said that they are expecting a rise on the cash rate next year.
"With a cash rate rise on the horizon, it could be a good time for borrowers to take advantage of the mortgage season promotions currently available by home loan lenders, which could help them get onto the property ladder so they can start preparing for rate hikes ahead," she said.
"We're also still seeing home loan interest rate movements, with 94 fixed home loans that saw reduced rates by as much as 0.70 percentage points over the past month, and 23 fixed rates increased by up to 0.30 percentage points. Interestingly, 27 variable rate home loans have fallen in the past month, by up to 0.30 percentage points from ANZ, My State, IMB, Bendigo Bank, Resi, Suncorp Bank, Wide Bay Australia and State Custodians."
She noted that it's a good idea to compare home loans and promotional offers available, but to be wary of the fees involved.
Caelli noted that today's announcement of a stable rate would be welcomed by borrowers, with a recent ME Bank survey recording 49% paying down their home loan faster with additional payments. Despite this, 42% said they were just managing to pay the minimum requirement.
"While any future rate increases are likely to be gradual, borrowers just managing repayments now will need to make financial adjustments when this happens," he said.
"We're also noticing an increase in borrowers taking out fixed term loans to protect themselves from potential RBA rate increases."
LJ Hooker chief executive officer Grant Harrod said that low rates have assisted in offsetting the fall in mining investment, and that the start to the spring market has been encouraging.
"However, while markets such as Sydney and Melbourne have performed well, there are many other markets which have softened or experience more modest result," said Harrod.
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jduke-EHk3XBmHkn

RBA on hold as they consider other measures to deal with house prices

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Finder.com.au’s Monthly Reserve Bank Survey of 28 leading economists and experts looks to shed some light on interest rates and the thoughts of the Reserve Bank. Here are comments from 10 of their experts on the current rate environment. Jonathan Chancellor, Property Observer
“The recent Sydney house price boom, after years of little growth, is not a sufficient trigger for the bank to make any move. The domestic economy appears to be strengthening, but the international outlook looks tricky to draw any firm conclusion ... It was interesting that the RBA has signalled it was looking at macroprudential moves to help contain the current property exuberance. I still reckon they will stick with simply stepping up its public warnings around housing prices and investor activity. A reasonable conclusion is that Australia is unlikely to introduce the New Zealand style of direct macro prudential controls.” Bill Evans, Westpac
“We do not expect to see the Reserve Bank changing rates anytime over the next year. Indeed, the Bank once again confirmed its intentions in its September board minutes for a period of stability in rates. Westpac expects that, with our expectation of a more favourable economic environment than is anticipated by the Reserve Bank, the next move in rates will be a tightening but not until the second half of 2015, with August currently appearing to be the date for the first move.” Angus Raine, Raine &amp; Horne
“Inflation is still within the acceptable 2-3% range, and unemployment is holding steady at &lt;5%. The RBA wants to see that the employment market has stabilised before it increases rates. Once it sees evidence that the unemployment rate has plateaued, it’s fair to expect that the RBA will begin to tighten monetary policy. The next cash rate change will be impacted by the global geopolitical climate. If tensions worsen in the Middle East and the Ukraine, it might prompt the RBA to hold off, while it will continue to monitor the US and EU recovery or lack thereof.” Grant Harrod, LJ Hooker
“The economy continues to perform as expected by the RBA. Employment and private investment remains the chief concern, however, these should be helped by the recent softening of the Australian dollar. Housing markets continue to remain buoyant with the growth seen in Sydney and Melbourne having a ripple effect out to the other, more affordable, capital city markets. The associated growth in construction is also helping rebalance the economy. However, price growth and investor demand for housing, especially in Sydney and Melbourne, has seen the RBA raise the prospect of introducing macro prudential measures to help de-risk the market.” Shane Oliver, AMP
“While housing related indicators are strong, providing a reason not to cut rates further, the rest of the economy is sub-par. Uncertainty remains high regarding how quickly the mining investment boom will unwind, inflation is benign and the Australian dollar remains too high – all of which suggests it's premature to start raising rates. The most recent commentary from the RBA has indicated that a period of stability in rates remains prudent. This language is likely to be dropped well before the RBA starts hiking rates.” Paul Bloxham, HSBC
“For the moment there's still concern that the labour market has spare capacity, and that they'd like the unemployment rate to be declining before they raise interest rates. By the same token, I don't think they've got scope to cut interest rates any further because the housing market continues to boom.” John Caelli, ME Bank
“We don’t expect interest rates to change in October despite the Australian dollar falling and concerns about rising house prices. The RBA’s key focus remains on providing conditions to support business investment and employment. That the RBA has flagged macro prudential tools to manage house prices suggests they may be considering options to deal with the situation beyond just interest rates. The RBA minutes continue to refer to a period of stability in interest rates and so we expect any rises in rates won’t occur until the first half of 2015.” Nicki Hutley, Urbis
“The balance of macroeconomic indicators suggest that growth has improved in 2014 and is close to trend, but is not yet accelerating sharply enough to concern policy makers. Unemployment and subdued wages will keep inflation from rising too quickly for a little longer ... It is easy to think that, because growth and inflation have been modest for a prolonged period, that they will remain so indefinitely. There is clearly momentum building in the economy however and, notwithstanding slower mining investment, this momentum will lift growth and inflationary pressures over the coming year.” Michael Witts, ING Direct
“The economy is still in transition, and despite the RBA being concerned about the housing market, they would be reluctant to increase rates given the impact on the exchange rate. Also employment data has been highly volatile over the past few months ... The action by the RBA is constrained by the action of US Fed and this will drive local timing. Also the exchange rate is a further constraint, the RBA would like to see the Australian dollar well under 90 US cents.” David Scutt, Independent Market Strategist
“The RBA will keep the cash rate steady at 2.50% in October, the fourteenth-consecutive month that this has occurred. They will keep their neutral bias and communicate that ‘the most prudent course is likely to be a period of stability in interest rates.’ While on the surface the grounds for a return to a hawkish bias seem to be building, most economic indicators have been improving, the Australian Dollar has fallen while unease towards developments in the established housing market is growing, counteracting those forces are real-negative wages growth, subdued business confidence along with a noticeable deterioration in recent Chinese economic data, something that along with recent USD strength has seen the prices for Australia’s key commodity exports fall sharply. Given that household consumption and non-mining investment will be crucial in offsetting the effects of the slowing mining capital expenditure boom in the years ahead, there are simply too many uncertainties at present for the RBA to adopt anything other than a wait-and-see approach. When, and only when, they see non-mining activity start to accelerate sharply will they begin the process of policy normalisation. If that doesn't occur, not my baseline forecast but certainly a possibility, an extended period of policy stability, or even further easing, appears likely.” Source: Finder
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10 expert opinions on interest rates: Reserve Bank Survey

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With no rate hike expected this afternoon, according to Finder’s panel of 28 experts, there is a rate hike expected for the next three years.
The 28 experts surveyed unanimously agreed that there will be no rate change today. However all forecast a rate rise next year and many subsequently pointed to a gradual upward cycle for three years.
When will the hikes begin? June 2015.
{mijopolls 48}
This prediction, from Finder, notes that 46% of experts believe that there is a chance of an increase in the third quarter of 2015.
Here are their predictions:
<img src="/images/2014/10/7/finder1.png" alt="">
Source: Finder
And what will the new normal be?
<img src="/images/2014/10/7/finder2.png" alt="">
<div align="center"> </div>
Source: Finder
Money expert for Finder, Michelle Hutchison, said that buyers should be cautious with borrowing levels as a result.
“The finder.com.au Reserve Bank Survey sentiment revealed that many factors will keep the cash rate at the current low level of 2.50%. Inflation being subdued, the low Australian Dollar, and damage to property markets outside Sydney and Melbourne should the cash rate rise too soon.
“However, the good times for property buyers are not expected to last much longer, with our survey showing the next rate rise being forecast for June 2015, and a 21 percent chance that the cash rate will start rising from the first quarter of next year,” she said.
With a gradual increase, 11% of the panel believe the cash rate will hit the historical average of 5%. The majority expect a new normal below 5%.
This is expected to occur by 2016, according to 32% of experts, or 2017, chosen by 29%.
“Only one respondent, Chief Economist at Commonwealth Bank Michael Blythe, is expecting a ‘new normal’ cash rate level to be reached in 2015. The remaining respondents were unable to comment,” she said.
“If you’re an existing home buyer or hitting the property market this mortgage season, make sure you prepare a buffer for when interest rates rise. This is the time when you should be paying as much as you can on your mortgage, to lower the impact of higher rates.”
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Interest rates expected to rise for three years, here’s when the first hike will be: Finder

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Reserve Bank of Australia chief Glenn Stevens has acknowledged the "elevated level of housing prices", as record low interest rates continue for another month.
In a speech made in Adelaide on Wednesday, Stevens noted the prospect of fostering excessive risk-taking behaviour in the financial sector, warning that if people over-commit themselves financially, the economy could be vulnerable to "nasty shocks". 
"It is stating the obvious that at present, while we may desire to see a faster reduction in the rate of unemployment, further inflating an already elevated level of housing prices seems an unwise route to try to achieve that," said Stevens.
According to RP Data, home prices in Australia's capital cities rose by 4.2% in the quarter to August, the highest winter price gain since 2007. The growth was largely driven by Sydney and Melbourne, where median dwelling prices rose by 5.0% and 6.4% respectively.
Unemployment sits at a 12 year high of 6.4%. 
Economists from Australia's major lenders have declared that there is no housing market bubble, others, including AMP Capital chief economist Shane Oliver, also consider Australian housing <a href="/expert-insights/buying/overvalued-housing-price-problem-returns-with-vengeance-amp-capitals-shane-oliver">expensive on a long-term basis</a>. 
Oliver said that the low interest rate climate has been a major factor in recent property growth, and there is potential for interest rates to encourage people to take on an imprudent level of risk.
"There's no doubt that low interest rates are driving the upswing in property prices," said Oliver. "When interest rates are cut, one of the ways that helps the economy is that it forces investors to take their money out of low risk investments like bank deposits, and move it to higher risk investments like housing and shares." 
However, Oliver maintained that Australian's level of financial risk is "not excessive in aggregate".
"The rate of growth in credits in Australia is still quite modest, by the standards of the past," he said, noting the Reserve Bank's credit statistics for July. Overall credit grew by 5.1% in the year to July, with 6.5% growth in housing credit. 
"At a 6.5% year on year rate, it's much lower than the 20% plus growth we saw a decade ago," said Oliver.
The Reserve Bank has maintained a record low overnight cash rate of 2.5% since August 2013, a policy Stevens said "could perhaps be described as boring". 
"If so, I would regard that as a small success," said Stevens, who highlighted the "stability and predictability" of the current interest rate structure.
You may also like to read: <a href="/expert-insights/finance/standby-for-rba-jawboning-on-overheated-sydney-and-melbourne-auction-markets">Standby for RBA jawboning on overheated Sydney and Melbourne auction markets</a>
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jrichardson-uRX5hFdKfN

Further inflating housing market "unwise": RBA's Glenn Stevens

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Australia's established housing market remained "strong overall", according to the Reserve Bank of Australia.
 The time taken to sell properties and the average size of vendor discounts are at low levels, and auction clearance rates are above average, albeit not as high as late last year, the bank's latest statement of monetary policy advised. 
Stock turnover appears to have increased a bit in the June quarter, though is still a little below average. 
The RBA noted the nationwide rental vacancy rate has been little changed over recent quarters at a relatively low level, but conditions in the rental market appear to have generally eased.
"Rent inflation has declined to its slowest pace since the mid 2000s."
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"Combined with strong growth of housing prices over the past year or so, rental yields have fallen to around their average of the past decade. 
"A strong recovery in dwelling investment is well under way, driven by low borrowing rates, growth of housing prices, significant population growth and a retargeting of government assistance for first home buyers to new homes. 
"Dwelling construction increased by almost 5% in the March quarter to be 8% higher over the year, as the substantial pick-up in residential building approvals over 2013 continued to flow through to activity.
"The increase was driven by a rise in new dwelling construction, particularly for higher- density dwellings. Alterations and additions activity also increased a little in the March quarter, after an extended period of weakness.
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More recently, residential building approvals have declined a little in trend terms, but remain at a high level consistent with further growth of dwelling investment (Graph 3.9 below). The recent trend decline owes mostly to a decline in higher-density approvals from the very high levels seen in late 2013. Approvals for detached houses have trended higher in all mainland states over the past couple of years, notwithstanding a recent decline in South Australia.
<img src="/images/2014/08/08/rba-graph-aug-8-one.jpg" alt="">
 
Other timely indicators of housing construction also point to a sustained recovery in dwelling investment. Loan approvals for new dwellings remained at a high level in May and first home owner grants for new dwellings have increased by 22% over the past year. Liaison reports indicate that demand for new dwellings remains firm, with ongoing strong demand by foreign buyers for inner- city apartments, particularly in Melbourne."
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The statement suggested household wealth has grown strongly over the past 18 months or so, buoyed by higher housing and equity prices and ongoing saving by households, although more recently growth has eased a little.
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 In most of the capital cities, housing price inflation was less rapid over the first half of 2014 than it was over the latter part of 2013.
 While prices appear to have levelled out in Perth and Adelaide, growth has remained relatively strong in Sydney and Melbourne. 
Surveys indicate that, compared with earlier in the year, fewer households expect housing prices to rise over the next 12 months, and households view buying conditions for dwellings as less favourable than they did a year ago," the latest RBA Statement on Monetary Policy suggested.
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It concluded that housing price inflation over 2014 to date has not been as rapid as it was over the second half of 2013, but prices continue to rise. 
"Loan approvals are higher than they were a year ago, but have been little changed since late last year.
"At this level, they are consistent with growth in housing credit stabilising at a rate that is a bit faster than income growth, although the growth of investor credit has continued to outpace that of owner-occupiers.
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"The high rate of housing price inflation has underpinned strong growth in standard measures of household wealth. 
"Along with the very low level of interest rates, this has seen consumption growing a little faster than household income, leading to a gradual decline in the saving rate over the past 18 months or so. 
"Nevertheless, after picking up through 2013, consumption growth looks to have slowed in the first half of this year, with weaker retail sales growth and consumer sentiment falling to below-average levels. 
"It remains to be seen whether this slower growth of consumption is temporary. 
"Indeed, a timely measure of consumer sentiment has rebounded recently to be back above average."
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jchancellor-FAypfDUnLy

Property investors advised rent inflation in decline, yields back to average: RBA

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The RBA's head of financial stability Luci Ellis has repeated the view that Australia's central bank won't be introducing ‘‘macroprudential’’ policy restrictions on higher-risk lending in order to preserve financial stability.
Despite limits on loans with high loan-to-valuation ratios being introduced in Canada, Sweden, Norway, Israel, Korea and Hong Kong, Ellis defended the RBA's caution.
‘‘We view macroprudential policy as something to be subsumed into the broader financial stability framework,’’ Ellis said in a speech to the University of Adelaide Economics Department.
“We recognise that quantitative restrictions were already tried in the 1960s and 1970s – and didn’t always work so well.
‘‘The division between ‘microprudential’ supervision, narrowly focused on individual institutions, and system-wide ‘macroprudential’ supervision, never made much sense to us in Australia.’’
Ellis stressed the central bank’s tools for promoting financial stability were the ‘‘telephone’’, a reference to calling APRA and raising concerns, and the ‘‘microphone’’, a reference to the RBA's public comments.
"Exposing and warning of risks can ideally change behaviour, and steer the system away from higher-risk outcomes," she said.
Her speech follows last week’s warning from APRA which unveiled new draft guidelines on how to manage risks in the mortgage market.
Ellis said APRA and the RBA were already well equipped to promote financial stability.
‘‘The rationale for carving out particular bits of the prudential framework under separate governance – which is what people mean nowadays by ‘macroprudential tools’ – appears to be that supervisors cannot be relied on to discharge their duties with system-level concerns in mind,’’ she said.
‘‘That might be true in some countries, but not in Australia and at least some other countries.’’
In framing the objectives of financial stability policy, Luci Ellis noted whenever housing prices boomed people worried that housing has become unaffordable. 
"Of course, if prices are rising, it must be that someone can afford those prices.
"If they are motivated by speculative expectations, though, prices can run ahead of levels that can be sustained in the longer term.
"So there can be a financial stability angle to those concerns, if a future fallout is likely to harm the real economy, either directly or via distress in the financial system.
"But the real policy concern here is that other people get priced out.
"It is fundamentally a question of distribution, particularly intergenerational distribution.
"This is not in the remit of financial stability policy, and the two goals should not be conflated.
"But we should be mindful of this equally legitimate goal of public policy, which is to ensure that everyone can access appropriate shelter that they can reasonably afford.
"Sometimes this goal mutually supports the goal of financial stability.
"But as we saw in the US housing meltdown, if you get the policy response to an affordability issue wrong, the consequences for financial stability can be dire," she outlined.
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RBA shies away from macroprudential housing policies, but microphone at the ready

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When interest rate change is announced each month, industry members take to the media to share their thoughts on what this means for consumers, home buyers and the property market generally.
If you're looking for <a href="/expert-insights/finance/interest-rates-crash-course-whats-the-relationship-to-the-property-market">a quick crash course in interest rates, and the perspectives around them, then read this article first</a>.
Property Observer has cherry picked some of the industry's <a href="/expert-insights/finance/rba-keeps-interest-rates-on-hold-for-june">responses to the RBA's decision to keep the interest rate on hold in June</a>.
Place Estate Agents CEO -  Damian Hackett (discussing the Brisbane market)
Certainly transactions have been taking place and we are seeing buyers active, but there has also been a bit of negative sentiment lingering in the market.
Keeping interest rates on hold will only strengthen confidence amongst buyers as it improves affordability, and that is the key for activating buyers.
As has been widely reported, Brisbane is currently in a very good position affordability-wise – not only are we yet to see the big price rises experienced by Sydney and Melbourne in recent times, but finance is also very affordable, with interest rates low and banks competing to secure business.
 
Laing+Simmons general manager - Leanne Pilkington
Over the past few days we have been confronted by news stories arguing the property boom is over, that confidence is plummeting and other overly dramatic claims.
Taking a step back, those experienced in the industry know that it's simply business as usual for the housing market.
A slight easing in house prices in May is simply a reflection of the current state of the market, with factors like seasonality and prevailing affordability issues exacerbated by a tough budget playing their part.
A property purchase or sale has always been a major financial decision. However it's also a strictly personal decision, and no amount of market speculation and outspoken commentary should detract from the need for people to carefully weigh up their own needs and financial capacity.
There are still impressive prices being achieved by vendors and buyers continue to enjoy an equal balance of power in negotiations. In short, the market keeps on ticking over and today's rate decision should see this continue over the winter months.
 
1300HomeLoan managing director - John Kolenda
The federal budget and its aftermath haven’t done anything to inspire consumer confidence and the latest data also shows property values nationwide have taken a hit
Under these circumstances the RBA remains justified in staying on the sidelines while the budget is flushed through the system and other economic data is assessed.
It’s still 50/50 going forward on whether the next rate movement from the RBA will be an increase or a reduction.
Whatever happens, we don’t expect any big movement in rates and the current level looks like it's the new norm for the foreseeable future.
 
See the next page for thoughts from REINSW, HIA, Mortgage Choice and RateCity.
 
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REINSW president - Malcolm Gunning
The decision to keep interest rates steady came largely as expected. The budget and the fall in consumer sentiment which followed, coupled with the steading demand for housing and a levelling out of the price spiral, left the Reserve Bank with little choice.
The run of historically low interest rates will come to an end and we encourage those who are thinking of entering the property market to factor this into their budgets
 
HIA chief economist - Harley Dale
Today’s statement conveys the RBA Board has a high degree of comfort with the current cash rate of 2.50 per cent, given an environment where competing factors are influencing Australia’s overall economic performance
A shining light for the Australian economy is the recovery in new residential construction activity.
It is encouraging that today the Bank confirmed the message that interest rates are on hold for a considerable period of time. A period of stability will maintain a positive environment for residential construction activity to boost economic growth throughout 2014 and into next year.
Today’s interest rate statement hopefully reduces the recent elevated level of conjecture, and therefore uncertainty, regarding the direction and timing of the next interest rate move. This uncertainty is itself unhelpful for the sustainability of a residential construction recovery.
 
CEO Rate City - Alex Parsons 
In light of the recent Federal Budget, where frankly, most Australians are going to be worse off, it's great news for mortgage borrowers in that their repayments will be steady for another month.
For many Australians out there, particularly those buying their first home in the east coast city markets it's very difficult to get a foot on the property ladder, and it's likely to get harder as Budget cuts hit the hip pocket.
While that may be surprising for certain people trying to get into the house market, a combination of low interest rates plus income increases over that period of time has caused this impact.
Despite the housing affordability being its best position for the last 12 years, for any Australian out there, particularly buying their first home in the east coast city markets, it's still very difficult.
So my tips for those types of home buyers would be to be wary of interest rates going up in the future. We have record low interest rates today, but make sure that you can afford a 2 percentage point increase in interest rates and still be able to make those repayments. If you can't you'll soon find yourself in mortgage stress and that's not a good place to be.
 
Mortgage Choice spokesperson - Jessica Darnbrough
The latest Westpac Melbourne Institute Index of Consumer Sentiment fell by 6.8% to 92.9 – the lowest level since August 2011.
The sharp fall in sentiment is indicative of an unfavourable response to the recent Federal Budget.
According to the Index, 59.2% of Australians said they expect their family finances to “worsen” over the coming 12 months as a result of the Budget.
In the months leading up to the Federal Budget, many economists had predicted interest rates to rise in the not-too-distant future. However, this may no longer be the case. Instead, the Reserve Bank is likely to leave rates on hold for some time and wait and see what happens to consumer sentiment over the coming months.
In fact, in the minutes of the Reserve Bank's May Board meeting, it was suggested that the current accommodative stance of monetary policy was appropriate for some time yet given the current outlook for the economy and the significant degree of monetary stimulus already in place.
 
See the next page for comments provided on the day of the RBA decision from RP Data, Finder and L J Hooker.
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Comments provided on the day
RP Data research director - Tim Lawless
From a housing market perspective, the Reserve Bank should be less concerned about housing markets overheating, with RP Data yesterday reporting the first fall in dwelling values in a year over the month of May and the trend rate of growth across the housing market has been cooling. Australia’s housing market has seen two years of escalating property values, so from a cyclical perspective the housing market is due for a slowdown.  Cooler housing market conditions shouldn’t surprise the Reserve Bank, who have been warning about overheated conditions and speculative investment activity in the Melbourne and Sydney markets. 
Gross rental yields in both these cities have fallen to near historic lows as value growth has substantially outpaced rental growth.  With the heat potentially coming out of the housing market, the RBA will find it much easier to keep interest rates at their low setting in an effort to continue stimulating housing construction and consumer spending. Add to the recently weak housing market a stubbornly high Australian dollar, lower commodity prices, slowing dwelling approvals and weaker consumer sentiment post budget and it’s clear that the RBA is likely to hold off on rate hikes for the foreseeable future.
 
Finder money expert - Michelle Hutchison
Despite new figures showing a month-on-month drop in property prices across the country, property values are much higher than ever. In fact, our research shows that national average (across five capital cities) property prices have increased by over $133,000 or up 27% to $628,320 (RP Data). 
If you waited for a property to drop before buying, interest rates could rise and outweigh the benefit of waiting. Australia's biggest Reserve Bank survey of leading economists and experts all expected the cash rate to remain unchanged today but the majority predict a rate rise by the end of the year or next year. If you waited a few months for a $500,000 property to drop by 4% to $480,000, with a 10% deposit and a loan size of $432,000, the lowest three-year fixed rates could rise by then to 5.19%. If you purchased a property now at $500,000 and a 10% deposit and loan size of $450,000, locking in the cheapest three-year fixed rate of 4.69% could save you about $1,400 over 3 years compared to waiting for property prices to drop and rates to potentially increase.
 
L J Hooker deputy chair - L Janusz Hooker
Looking forward, the only hiccup appears to be the uncertainty surrounding which federal budget measures will pass parliament.
Initially this caused a drop in consumer confidence but that appears to have passed.
The good news for home owners is the longer this uncertainty remains in place the longer interest rates will remain on hold.
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Industry perspectives on the RBA’s interest rate hold

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The Reserve Bank of Australia (RBA) has again chosen to keep the overnight cash rate at its record low level of 2.5%. The cash rate has not moved since August 2013.
The decision was widely anticipated by property industry commentators, with 16 surveyed industry experts recently <a href="/expert-insights/finance/16-experts-predict-no-change-from-rba-tomorrow">predicting the cash rate would stay on hold</a>.
RP Data’s research director Tim Lawless says that recent results in the property market provide a backdrop for the RBA’s decision.
“From a housing market perspective, the Reserve Bank should be less concerned about housing markets overheating, with RP Data yesterday reporting the first fall in dwelling values in a year over the month of May and the trend rate of growth across the housing market has been cooling,” he says.
“Australia’s housing market has seen two years of escalating property values, so from a cyclical perspective the housing market is due for a slowdown.  Cooler housing market conditions shouldn’t surprise the Reserve Bank, who have been warning about overheated conditions and speculative investment activity in the Melbourne and Sydney markets.”
According to Lawless, the current housing market will encourage the RBA to keep rates low for now.
“Gross rental yields in both these cities have fallen to near historic lows as value growth has substantially outpaced rental growth.  With the heat potentially coming out of the housing market, the RBA will find it much easier to keep interest rates at their low setting in an effort to continue stimulating housing construction and consumer spending.
“Add to the recently weak housing market a stubbornly high Australian dollar, lower commodity prices, slowing dwelling approvals and weaker consumer sentiment post budget and it’s clear that the RBA is likely to hold off on rate hikes for the foreseeable future,” said Lawless.
Property Observer’s Jonathan Chancellor agrees, writing yesterday that the <a href="/expert-insights/finance/last-months-price-growth-dip-the-first-since-may-2013-so-rba-will-be-content">Reserve Bank will be content with a slight dip in home values</a> over May. 
LJ Hooker deputy chair L Janusz Hooker said today’s decision is unsurprising given the stability of the economy.
"Looking forward, the only hiccup appears to be the uncertainty surrounding which federal budget measures will pass parliament," said Hooker.
"Initially this caused a drop in consumer confidence but that appears to have passed.
"The good news for home owners is the longer this uncertainty remains in place the longer interest rates will remain on hold."
Hooker predicts that the economy’s movement away from the mining sector will lead to future rate increases, but probably not until the end of this year or the beginning of 2015.
Michelle Hutchison of finder.com.au says that while interest rates are low, buyers shouldn’t wait for property prices to drop before investing.
"While there was no change to the cash rate today, interest rates are set to rise so it's a good time to consider locking in a fixed interest rate,” says Hutchison.
“For first home buyers, don't wait for property prices to fall as rising interest rates could outweigh the benefit of a cheaper property,” she says.
Low interest rates and slowing property price appreciation have made <a href="/expert-insights/finance/thanks-to-low-interest-rates-affordability-at-highest-level-for-over-a-decade-hia-cba-index">housing more affordable at a national level</a> than it has been for more than a decade, according to the March 2014 quarter HIA-CBA Housing Affordability Index, released last week.
For more on how to take advantage of low rates and prepare for a rise, <a href="/expert-insights/finance/how-to-prepare-for-an-interest-rate-increase">click here</a>.
 
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RBA keeps interest rates on hold for June

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The Reserve Bank of Australia’s head of financial stability Luci Ellis offered her thoughts on Australia’s housing markets in a speech last month entitled Space and Stability: Some Reflections on the Housing-Finance System. 
In the speech, Ellis noted increasing coverage of housing markets in conversations about financial stability around the world. She urged her audience to remember residential are physical structures, located on fixed pieces of land, and emphasised the importance of urban structures to financial stability.
Here are five main points to take away from her speech:
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Jobs are becoming more centralised “Jobs are concentrated in the central business districts and the areas immediately surrounding them,” noted Ellis. “The power of the central place is even more striking if we directly contrast where the jobs are with where the employed people live,” she said, with reference to the graph below, which shows the ratio of jobs in an area to employed people living there. <img src="/images/2014/06/02/sp-so-150514-graph7-small.gif" alt=""> “Places with ratios well above 1 are employment centres, attracting commuters from elsewhere in the city, or even from outside its limits. Places with ratios well below 1 are the commuter districts, the dormitory suburbs,” she explained. “As you can see, there are factory districts away from the CBD, especially in Melbourne, and office parks on the way out to Macquarie University in Sydney. But in all of these cities, the CBD is still the job magnet.” 
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Residences are densest around the CBD “The pattern of residence is similar, though not quite as pronounced,” said Ellis. “Population density is higher near the centres and declines rapidly.” “Some of the outermost districts still contain agricultural land and a good fraction of national parks, so it isn't surprising that population densities are low in these places. I find it interesting that even some middle-ring districts are not that much denser,” she said. She noted a trade-off between space and travel time, with  
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…And that isn’t changing. “Part of the reason for the higher population density closer to the centre is historical. The inner parts of cities are older, built when we had to live more compactly. As incomes rose, people wanted bigger, nicer homes. As cars became more common, the cost of locating further out declined, and it became feasible to have those bigger homes,” said Ellis. “So newer homes further out tended to be bigger and sit on bigger blocks of land. Some of the older homes get renovated to be consistent with our higher modern incomes and aspirations. “But we don't see much expansion of block sizes in the inner areas. The land parcels stay small. Sure, it would be a legal hassle to consolidate land titles like that, but people generally don't even try. That is because they are trading off space against price and distance.” 
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The pattern is making non-capital city growth difficult Although some might expect that remote working would rise with the use of the internet, Ellis explained that “jobs are showing even greater tendency to congregate in existing centres.” And this is halting the expansion of regional areas." “I also can't help noticing how difficult it seems to grow the smaller cities in this country relative to the bigger cities. With the possible exceptions of Newcastle, Geelong and maybe Bendigo and Ballarat, few centres outside the state capitals have many corporate headquarters or other job magnets. These self-sustaining job magnets seem to be necessary to create the variety of job opportunities that would attract large numbers of former city dwellers. “Over recent years at least, these smaller centres had rates of employment growth and changes in employment-to-population ratios that were similar to or a little below those in the big cities, and a bit below those of inner-city areas,” noted Ellis. “At this rate, it will be hard for the smaller centres to start catching up with the bigger cities, relatively speaking. That means that if big-city housing prices should rise too high for some residents, smaller cities cannot provide alternative locations that are any more viable than they are today." 
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The dream of a backyard and picket fence may not be for everyone…but neither is the highrise. In her speech, Ellis said Australian cities should diversify the range of dwellings available, to ease financial and social pressures on Australians. “As a mode of living, low-density suburbia has its advantages,” said Ellis. But it does mean that distances are greater and almost every trip requires a car. The only alternative offered at the time of our first mass suburbanisation seemed to be the ‘tower in the park’, Le Corbusier's utopian dream of apartment living. But the reality turned out to be a nightmare of social isolation for the public housing tenants in those developments." She didn't advocate an end to low density detached housing, but instead said that a greater range of choices would help ensure financial stability for buyers. “I'm hopeful that the future brings Australians a wider range of places they would be happy to move to; different housing types for different family sizes and life stages; and a greater confidence that centres outside state capitals can offer the strong job markets and scope for entrepreneurship people need, and housing at a price they can better afford.  “That way, people can see an upswing in housing prices in the larger centres and say, ‘I don't have to buy into that. I don't have to stretch my finances’,” said Ellis.  “Australian household finances are not looking that stretched at the moment, and we'd like to see it stay that way.” 
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In the same speech, she urged first home buyers <a href="/expert-insights/finance/disheartened-fhbs-warned-not-to-overstretch-home-loan-borrowings-rbas-luci-ellis">not to over commit themselves with large home loans</a>. The Reserve Bank of Australia will make its June cash rate announcement tomorrow. 
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Five thoughts on the property market from the RBA

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Growing demand for housing close to inner city areas was the topic of a recent speech by The Reserve Bank’s (RBA) head of financial stability, Luci Ellis.
Entitled ‘Space and Stability: Some Reflections on the Housing-Finance System’, Ellis made some valid points relevant to the housing market in her speech.
Ellis’ speech goes some way to explaining why detached housing closer to the centre of a city is much more expensive than for those suburbs located further away. Put simply, Ellis noted in her speech that housing in these areas is in short supply and with high demand due to its convenience to major working nodes. 
Several key points made on housing within the speech were:
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<li>Housing prices in the inner-ring are becoming more expensive than those in outer areas of our capital cities;</li>
<li>The availability of jobs is becoming even more centralised, particularly within already established working nodes;</li>
<li>There are minimal jobs outside of city areas; it is becoming increasingly difficult to grow smaller cities and few centres outside of the capital cities have job magnets. Given this, when residents are priced out of capital cities and more affordable regional housing options are not a viable alternative.</li>
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A rise in the popularity of inner-city unit living is driven by a desire to live closer to the city centre at a lower cost than detached housing. Australia has comparatively low density cities with significant price premiums in the most convenient areas of the city.
Ellis’ speech noted that if housing costs rise beyond people's comfort levels, it is not always feasible or attractive for households to respond by moving to cheaper areas, especially if the more affordable options are further away from their place of employment.
The RBA is hopeful that over time the structure of our cities is such that home owners will have more options as to where they can live, rather than having to live in expensive housing closer to working nodes such as current policies often necessitate.
With plenty of commentary around on some of the best performing areas around the country, it’s important to note that this analysis is typically undertaken over a relatively short-time frame of around 10 years, and where it is often reported that new greenfield areas and regional housing markets are better for capital growth than inner city areas.
The nature of new greenfield developments, both within a capital city and in regional areas, can lift prices in these areas from a very low starting point to a much higher new base as the area sees an influx of new modern housing. While over a shorter time frame this may result in heightened levels of median price increases, this is typically a relatively short-term phenomenon.
It also compares to the shift from a much lower quality initial housing product to a far superior newer housing supply.
Below is a list of suburbs that have recorded the largest rise in median selling prices over a 10 year and a 20 year timeframe. Interestingly, Miles and Chinchilla in regional Queensland are the only regional suburbs listed. Elsewhere, the list is dominated by a collection of the most desirable inner city suburbs in Sydney, Melbourne and Brisbane - all with high median prices, and all relatively close to major working nodes .
<img src="/images/2014/05/29/kusher-may-29-chart-one.gif" alt="">
With the population continuing to grow and housing supply insufficient we would expect that inner-city houses will continue to be the best performed over the long-term with significant demand and a short supply available.
Note: Median prices are not the most appropriate measure of a market change because these don’t continually measure the change across the same collection of properties. Median prices look at those properties that transaction over specific periods (which may be dramatically different each year).
The table above shows a strong bias towards regional areas of the country over a shorter time frame, particularly those linked to the resource sector. The rate of compound growth over the 10 years is much higher than those in the second table which looks at the 20 year period and reflects the boom in the mining sector over recent years.
The table below supports comments from the RBA with the list dominated by inner city suburbs.
<img src="/images/2014/05/29/kusher-may-29-chart-two.gif" alt="">
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